Mexico confirms $55 hedge… Bloomberg

“The oil producer locked in hedges at $55 a barrel, equivalent to the price approved by lawmakers for the 2019 budget, according to a Finance Ministry statement. The total expense comes to about 23.5 billion pesos.

Mexico has in recent years spent around $1 billion on average buying financial put options from Wall Street banks, a closely-watched set of trades that typically covers 200 million to 300 million barrels and has the potential to roil markets.”

In a previous Bloomberg article, here, Mexico reportedly made $5.085 billion on its 2008 hedge (prices went from around $147 to $35) and from 2001 to 2017 made $2.4 billion…

We once had a producer customer who stopped hedging using futures and options… Over the long haul the hedging program lost money… They decided the best way to hedge was to become the lowest cost producer with the strongest balance sheet… Just one company’s view…